Elon Musk’s start-up xAI reportedly cancelled a prospective $10 billion contract with Oracle to rent cloud servers from the software giant to create its AI-training infrastructure.
According to The Information, conversations ended when the corporation was unable to fulfil Musk’s deadline demands, and xAI instead chose to build its supercomputer in Memphis.
Following the publication on The Information, Musk announced on X that xAI chose to train its next major system internally using Nvidia’s H100 GPUs because “our fundamental competitiveness depends on being faster than any other AI company”.
xAI already rents approximately 16,000 Nvidia GPUs from Oracle, making it one of the largest users of the cloud service.
“Oracle is a great company, and another company shows promise also involved in that OpenAI GB200 cluster, but when our fate depends on being the fastest, by far, we must have our own hands on the steering wheel rather than be a backseat driver,” the tech billionaire said.
Earlier this year, the AI firm was in discussion with Oracle about a $10 billion multi-year cloud deal, but talks fell due to xAI’s deadline expectations and Oracle’s fears that the startup’s desired location did not have access to an appropriate power supply.
Instead, xAI intends to create “the world’s most powerful supercomputer” in Memphis, Tennessee. Musk stated that he expects the supercomputer to be operational by the autumn of 2025.
“xAI contracted for 24k H100s from Oracle and Grok 2 trained on those. Grok 2 is going through finetuning and bug fixes. Probably ready to release next month.
xAI is building the 100k H100 system itself for the fastest time to completion. Aiming to begin training later this month.,” Musk noted.
Musk also stated that xAI’s Grok 2 model was trained on 24,000 Nvidia H100 chips from Oracle and is “probably ready to release next month” after going through additional fine-tuning and bug fixes.
We earlier reported that xAI announced that the second-round funding included Sequoia Capital, Andreessen Horowitz, and Saudi Prince Alwaleed Bin Talal.
